American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
When Big Data Enables Behavioral Manipulation
American Economic Review: Insights
vol. 7,
no. 1, March 2025
(pp. 19–38)
Abstract
We build a model of online behavioral manipulation driven by AI advances. A platform dynamically offers one of n products to a user who slowly learns product quality. User learning depends on a product's "glossiness," which captures attributes that make products appear more attractive than they are. AI tools enable platforms to learn glossiness and engage in behavioral manipulation. We establish that AI benefits consumers when glossiness is short-lived. In contrast, when glossiness is long-lived, behavioral manipulation reduces user welfare. Finally, as the number of products increases, the platform can intensify behavioral manipulation by presenting more low-quality, glossy products.Citation
Acemoglu, Daron, Ali Makhdoumi, Azarakhsh Malekian, and Asuman Ozdaglar. 2025. "When Big Data Enables Behavioral Manipulation." American Economic Review: Insights 7 (1): 19–38. DOI: 10.1257/aeri.20230589Additional Materials
JEL Classification
- C55 Large Data Sets: Modeling and Analysis
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- L86 Information and Internet Services; Computer Software